Australia’s future as the bread and milk basket of Asia seems assured.
But increasingly it is looking like those assets may not be owned locally. The Australian reports this morning that Chinese food giant Bright Food Group has a war chest of $2 billion to spend on international acquisitions.
That’s just 50% of annual revenues, which means the purchases are likely to come from free cash flow, and Bright Foods and its subsidiary Bright Dairy will be able to bid competitively.
Australia is a primary target with Zhiyong Wang, Bright Dairy’s East China Central Factory manager, telling The Australian:
The clean and green and the food safety record is what we value … we would like to start with dairy and move to all other foods from Australia. At the moment we are doing a lot of trade and import-export business, but in the future we would like to move up the value chain and do a lot more co-operation in depth. Look at greater market from Australia, more vertical integration.
The challenge for Australian business and Australia is to capture some of the value of investments from companies like Bright Food for the economy’s long-term future and not just sell out and take the short-term cash.
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